Oil prices and the U.S. trade deficit (2006-24, 09/22/2006)
...
How has this adjustment process played out in the U.S. so far? During the last two years, the nonpetroleum trade deficit has not improved but has actually remained constant, at $44 billion. This suggests that the adjustment process in the U.S. overall trade deficit is occurring quite slowly. How long, then, can the adjustment process take? The answer depends, in part, on the persistence of the oil price increase: The longer oil prices stay at high levels, the longer it will take for the trade deficit to adjust.
...
Conclusions
Oil prices have almost quadrupled since the beginning of 2002. For an oil-importing country like the U.S., this has substantially increased the cost of petroleum imports. International trade data suggest that this increase has exacerbated the deterioration of the U.S. trade deficit, especially since the second half of 2004. One factor can explain this evolution: The real volume of U.S. petroleum imports has remained essentially constant. One explanation for why the demand for petroleum imports has not declined in response to higher prices comes from a model in which firms are fairly limited in their ability to adjust their use of energy sources, such as oil, in the short term. ...
Friday, June 6, 2008
with health coverage, pension benefits, job security, workloads, stress levels, and often wages growing worse for millions of workers.
Truthdig - Arts and Culture - Nicholas von Hoffman on ‘The Big Squeeze’Posted on Jun 6, 2008 | book cover | By Nicholas von Hoffman
You may be surprised to learn that the pleasant person from FedEx Ground delivering your package owns the truck which he or she has parked in front of your house. FedEx Ground drivers, you will find out in Steven Greenhouse’s “The Big Squeeze: Tough Times for the American Worker,” are not FedEx employees.
They are what are called independent contractors, although it demands no little effort to discern what about their position is independent. If they do not do what they are told, their contracts are abrogated forthwith. They are required to buy their own truck with 60 monthly installments of $781.12, which comes to $46,867.20. Plus there is a final kicker payment of $8,000, all of which adds up to a grand total of almost $55,000. On top of this, as an independent business person, the driver must bear the costs of insurance, maintenance, fuel, repairs and the fee for the FedEx uniform rental.
...
... you are introduced to an electrical engineer named Myra Bronstein, working for Watchmark, a Bellevue, Wash., firm which develops software used by cell phone companies. ... Myra recalled, “The head of HR said, ‘Unfortunately, we’re having layoffs, and you’re in the room because you’re being impacted by the layoffs.’ ” The 18 engineers were dumbstruck, but the head of human resources pressed on. “ ’Your replacements,’ ” she continued, “ ’are flying in from India, and you’re expected to train them if you are going to receive severance.’ ” ...
...
The writer’s central thesis is, “One of the least examined but most important trends taking place in the United States today is the broad decline in the status and treatment of American workers—white-collar and blue-collar workers, middle-class and low-end workers—that began nearly three decades ago, gradually gathered momentum, and hit with full force soon after the turn of this century. A profound shift has left a broad swath of the American workforce on a lower plain than in decades past, with health coverage, pension benefits, job security, workloads, stress levels, and often wages growing worse for millions of workers.” ...
You may be surprised to learn that the pleasant person from FedEx Ground delivering your package owns the truck which he or she has parked in front of your house. FedEx Ground drivers, you will find out in Steven Greenhouse’s “The Big Squeeze: Tough Times for the American Worker,” are not FedEx employees.
They are what are called independent contractors, although it demands no little effort to discern what about their position is independent. If they do not do what they are told, their contracts are abrogated forthwith. They are required to buy their own truck with 60 monthly installments of $781.12, which comes to $46,867.20. Plus there is a final kicker payment of $8,000, all of which adds up to a grand total of almost $55,000. On top of this, as an independent business person, the driver must bear the costs of insurance, maintenance, fuel, repairs and the fee for the FedEx uniform rental.
...
... you are introduced to an electrical engineer named Myra Bronstein, working for Watchmark, a Bellevue, Wash., firm which develops software used by cell phone companies. ... Myra recalled, “The head of HR said, ‘Unfortunately, we’re having layoffs, and you’re in the room because you’re being impacted by the layoffs.’ ” The 18 engineers were dumbstruck, but the head of human resources pressed on. “ ’Your replacements,’ ” she continued, “ ’are flying in from India, and you’re expected to train them if you are going to receive severance.’ ” ...
...
The writer’s central thesis is, “One of the least examined but most important trends taking place in the United States today is the broad decline in the status and treatment of American workers—white-collar and blue-collar workers, middle-class and low-end workers—that began nearly three decades ago, gradually gathered momentum, and hit with full force soon after the turn of this century. A profound shift has left a broad swath of the American workforce on a lower plain than in decades past, with health coverage, pension benefits, job security, workloads, stress levels, and often wages growing worse for millions of workers.” ...
Trading Loophole for Wall Street Speculators Is Driving Up Prices, Critics Say
Investors' Growing Appetite for Oil Evades Market Limits | By David Cho | Washington Post Staff Writer | Friday, June 6, 2008; Page A01
Hedge funds and big Wall Street banks are taking advantage of loopholes in federal trading limits to buy massive amounts of oil contracts, according to a growing number of lawmakers and prominent investors, who blame the practice for helping to push oil prices to record highs.
The federal agency that oversees oil trading, the Commodity Futures Trading Commission, has exempted these firms from rules that limit speculative buying, a prerogative traditionally reserved for airlines and trucking companies that need to lock in future fuel costs.
The CFTC has also waived regulations over the past decade on U.S. investors who trade commodities on some overseas markets, freeing those investors to accumulate large quantities of the future oil supply by making purchases on lightly regulated foreign exchanges.
Over the past five years, investors have become such a force on commodity markets that their appetite for oil contracts has been equal to China's increase in demand over the same period, said Michael Masters, a hedge fund manager who testified before Congress on the subject last month. The commodity markets, he added, were never intended for such large financial players.
...
Walter Lukken, the acting chairman of the CFTC, acknowledged in an interview that his agency has had a hard time keeping up with the sector it oversees. Commodity trading has exploded in complexity and popularity, he said, growing six-fold in trading volume since 2000. That was the year a handful of giant energy companies, including Enron, successfully lobbied Congress to ease the regulation of energy markets.
Meanwhile, the CFTC's staffing has dropped to its lowest levels in the agency's 33-year history.
"We could hire an extra 100 people and put them to work tomorrow given the inflow of trading volume," Lukken said. "We are doing the best we can in difficult circumstances. . . . This is something that we are obviously concerned with -- the potential for manipulation." ...
Hedge funds and big Wall Street banks are taking advantage of loopholes in federal trading limits to buy massive amounts of oil contracts, according to a growing number of lawmakers and prominent investors, who blame the practice for helping to push oil prices to record highs.
The federal agency that oversees oil trading, the Commodity Futures Trading Commission, has exempted these firms from rules that limit speculative buying, a prerogative traditionally reserved for airlines and trucking companies that need to lock in future fuel costs.
The CFTC has also waived regulations over the past decade on U.S. investors who trade commodities on some overseas markets, freeing those investors to accumulate large quantities of the future oil supply by making purchases on lightly regulated foreign exchanges.
Over the past five years, investors have become such a force on commodity markets that their appetite for oil contracts has been equal to China's increase in demand over the same period, said Michael Masters, a hedge fund manager who testified before Congress on the subject last month. The commodity markets, he added, were never intended for such large financial players.
...
Walter Lukken, the acting chairman of the CFTC, acknowledged in an interview that his agency has had a hard time keeping up with the sector it oversees. Commodity trading has exploded in complexity and popularity, he said, growing six-fold in trading volume since 2000. That was the year a handful of giant energy companies, including Enron, successfully lobbied Congress to ease the regulation of energy markets.
Meanwhile, the CFTC's staffing has dropped to its lowest levels in the agency's 33-year history.
"We could hire an extra 100 people and put them to work tomorrow given the inflow of trading volume," Lukken said. "We are doing the best we can in difficult circumstances. . . . This is something that we are obviously concerned with -- the potential for manipulation." ...
Many see the [early termination] fees as an unfair penalty that makes it difficult to switch providers.
Scrutiny of Phone Fees May Broaden to TV, Internet | FCC Hearing to Target Cancellation Charges | By Cecilia Kang | Washington Post Staff Writer | Saturday, May 31, 2008; Page D01
A planned federal hearing on penalties that cellphone users pay for canceling their contracts early may be expanded to include a discussion on similar fees for ending cable and Internet services ahead of schedule, the chairman of the Federal Communications Commission said in an interview yesterday.
...
The attention to cancellation fees illustrates a growing frustration among consumers, who spend an average of $200 each month for wireless phone, cable and Internet services. Many see the fees as an unfair penalty that makes it difficult to switch providers. Early-termination fees were among the five most common complaints by cellphone users, who filed 20,300 service-related complaints in 2007, according to the FCC.
Many wireless companies are fighting lawsuits seeking hundreds of millions of dollars in fees that have been collected from former subscribers. Cable, DSL Internet and paid television services such as Verizon's FiOS also have had an increase in complaints from consumers about early-termination fees.
ad_icon
Now wireless carriers are pushing a policy that, if adopted, could provide relief from the fines, which typically range from $150 to $200. Verizon and AT&T have recently softened their policies, with prorated plans that would knock down the penalty by $5 for each month of service. T-Mobile intends to introduce a similar plan next month; ...
A planned federal hearing on penalties that cellphone users pay for canceling their contracts early may be expanded to include a discussion on similar fees for ending cable and Internet services ahead of schedule, the chairman of the Federal Communications Commission said in an interview yesterday.
...
The attention to cancellation fees illustrates a growing frustration among consumers, who spend an average of $200 each month for wireless phone, cable and Internet services. Many see the fees as an unfair penalty that makes it difficult to switch providers. Early-termination fees were among the five most common complaints by cellphone users, who filed 20,300 service-related complaints in 2007, according to the FCC.
Many wireless companies are fighting lawsuits seeking hundreds of millions of dollars in fees that have been collected from former subscribers. Cable, DSL Internet and paid television services such as Verizon's FiOS also have had an increase in complaints from consumers about early-termination fees.
ad_icon
Now wireless carriers are pushing a policy that, if adopted, could provide relief from the fines, which typically range from $150 to $200. Verizon and AT&T have recently softened their policies, with prorated plans that would knock down the penalty by $5 for each month of service. T-Mobile intends to introduce a similar plan next month; ...
Iraq War May Have Increased Energy Costs Worldwide by a Staggering $6 Trillion
Iraq War May Have Increased Energy Costs Worldwide by a Staggering $6 Trillion | By Geoffrey Lean, The Independent. Posted May 27, 2008.
The invasion of Iraq by Britain and the US has trebled the price of oil, according to a leading expert, costing the world a staggering $6 trillion in higher energy prices alone.
The oil economist Dr Mamdouh Salameh, who advises both the World Bank and the UN Industrial Development Organisation (Unido), told The Independent on Sunday that the price of oil would now be no more than $40 a barrel, less than a third of the record $135 a barrel reached last week, if it had not been for the Iraq war. ...
The invasion of Iraq by Britain and the US has trebled the price of oil, according to a leading expert, costing the world a staggering $6 trillion in higher energy prices alone.
The oil economist Dr Mamdouh Salameh, who advises both the World Bank and the UN Industrial Development Organisation (Unido), told The Independent on Sunday that the price of oil would now be no more than $40 a barrel, less than a third of the record $135 a barrel reached last week, if it had not been for the Iraq war. ...
Ralph Nader: What's Really Driving the High Price of Oil?
Ralph Nader: What's Really Driving the High Price of Oil? May 28, 2008 | By RALPH NADER
What factors are causing the zooming price of crude oil, gasoline and heating products? What is going to be done about it?
Don’t rely on the White House—with Bush and Cheney marinated in oil—or the Congress—which has hearings that grill oil executives who know that nothing is going to happen on Capitol Hill either.
Last week the price of crude oil reached about $130 a barrel after spiking to $140 briefly. The immediate cause? Guesses by oil man T. Boone Pickens and Goldman Sachs that the price could go to $150 and $200 a barrel respectivly in the near future. They were referring to what can be called the hoopla pricing party on the New York Mercantile Exchange. (NYMEX)
...
Oil was at $50 a barrel in January 2007, then $75 a barrel in August 2007. Now at $130 or so a barrel, it is clear that oil pricing is speculative activity, having very little to do with physical supply and demand. An essential product—petroleum—is set by speculators operating on rumor, greed, and fear of wild predictions.
Over the time since early 2007, U.S. demand for petroleum has fallen by 1 percent and world demand has risen by 1.3 percent. Supplies of crude are so plentiful, according to the Wall Street Journal, “traders of physical crude oil say their market is suffering from too much supply, not too little.”
...
Historically, oil has been afflicted with the control of monopolists. From the late nineteenth century days of John D. Rockefeller, and his Standard Oil monopoly, to the emergence of the “Seven Sisters” oligopoly, made up of Standard Oil, Shell, BP, Texaco, Mobil, Gulf and Socal, to the rise of OPEC representing the major producing countries, the “free market” price of oil has been a mirage. Despite the breakup of the Standard Oil company by the government’s trustbusters about 100 years ago, selling cartels and buying oligopolies kept reasserting themselves. ...
What factors are causing the zooming price of crude oil, gasoline and heating products? What is going to be done about it?
Don’t rely on the White House—with Bush and Cheney marinated in oil—or the Congress—which has hearings that grill oil executives who know that nothing is going to happen on Capitol Hill either.
Last week the price of crude oil reached about $130 a barrel after spiking to $140 briefly. The immediate cause? Guesses by oil man T. Boone Pickens and Goldman Sachs that the price could go to $150 and $200 a barrel respectivly in the near future. They were referring to what can be called the hoopla pricing party on the New York Mercantile Exchange. (NYMEX)
...
Oil was at $50 a barrel in January 2007, then $75 a barrel in August 2007. Now at $130 or so a barrel, it is clear that oil pricing is speculative activity, having very little to do with physical supply and demand. An essential product—petroleum—is set by speculators operating on rumor, greed, and fear of wild predictions.
Over the time since early 2007, U.S. demand for petroleum has fallen by 1 percent and world demand has risen by 1.3 percent. Supplies of crude are so plentiful, according to the Wall Street Journal, “traders of physical crude oil say their market is suffering from too much supply, not too little.”
...
Historically, oil has been afflicted with the control of monopolists. From the late nineteenth century days of John D. Rockefeller, and his Standard Oil monopoly, to the emergence of the “Seven Sisters” oligopoly, made up of Standard Oil, Shell, BP, Texaco, Mobil, Gulf and Socal, to the rise of OPEC representing the major producing countries, the “free market” price of oil has been a mirage. Despite the breakup of the Standard Oil company by the government’s trustbusters about 100 years ago, selling cartels and buying oligopolies kept reasserting themselves. ...
German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds
Germany in call for ban on oil speculation | By Ambrose Evans-Pritchard | Last Updated: 12:53am BST 27/05/2008
German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.
It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.
...
Mr Beckmeyer said the last 25pc rise in the price of oil to $135 a barrel had nothing to do with underlying supply and demand. “It’s pure speculation,” he said.
...
There is now broad support in Germany for a clampdown on “locust” funds. President Horst Köhler said modern capitalism had turned into a “monster”, bringing the entire financial system to the brink of collapse this spring. ...
German leaders are to propose a worldwide ban on oil trading by speculators, blaming the latest spike in crude prices on manipulation by hedge funds.
It is the most drastic proposal to date amid escalating calls from Europe, the US and Asia for controls on market forces, underscoring the profound shift in the political climate since the credit crunch began. India has already suspended futures trading of five commodities.
...
Mr Beckmeyer said the last 25pc rise in the price of oil to $135 a barrel had nothing to do with underlying supply and demand. “It’s pure speculation,” he said.
...
There is now broad support in Germany for a clampdown on “locust” funds. President Horst Köhler said modern capitalism had turned into a “monster”, bringing the entire financial system to the brink of collapse this spring. ...
Swiss bank paid McCain co-chair to push agenda on U.S. mortgage crisis
McCain economic policy shaped by lobbyist - Countdown with Keith Olbermann- msnbc.comBy Jonathan Larsen, producer,
with Keith Olbermann | MSNBC | updated 7:52 p.m. CT, Tues., May. 27, 2008
Republican presidential candidate Sen. John McCain’s national campaign general co-chair was being paid by a Swiss bank to lobby Congress about the U.S. mortgage crisis at the same time he was advising McCain about his economic policy, federal records show. [See sidebar.] ...
with Keith Olbermann | MSNBC | updated 7:52 p.m. CT, Tues., May. 27, 2008
Republican presidential candidate Sen. John McCain’s national campaign general co-chair was being paid by a Swiss bank to lobby Congress about the U.S. mortgage crisis at the same time he was advising McCain about his economic policy, federal records show. [See sidebar.] ...
all we would have to do to fully fund our nation’s entitlement programs would be to cut discretionary spending by 97 percent
Storms on the Horizon - Richard Fisher Speeches - News Remarks before the Commonwealth Club of California | San Francisco, California | May 28, 2008
...
Eight years ago, our federal budget, crafted by a Democratic president and enacted by a Republican Congress, produced a fiscal surplus of $236 billion, the first surplus in almost 40 years and the highest nominal-dollar surplus in American history. While the Fed is scrupulously nonpartisan and nonpolitical, I mention this to emphasize that the deficit/debt issue knows no party and can be solved only by both parties working together. For a brief time, with surpluses projected into the future as far as the eye could see, economists and policymakers alike began to contemplate a bucolic future in which interest payments would form an ever-declining share of federal outlays, a future where Treasury bonds and debt-ceiling legislation would become dusty relics of a long-forgotten past. The Fed even had concerns about how open market operations would be conducted in a marketplace short of Treasury debt.
...
Eight years ago, our federal budget, crafted by a Democratic president and enacted by a Republican Congress, produced a fiscal surplus of $236 billion, the first surplus in almost 40 years and the highest nominal-dollar surplus in American history. While the Fed is scrupulously nonpartisan and nonpolitical, I mention this to emphasize that the deficit/debt issue knows no party and can be solved only by both parties working together. For a brief time, with surpluses projected into the future as far as the eye could see, economists and policymakers alike began to contemplate a bucolic future in which interest payments would form an ever-declining share of federal outlays, a future where Treasury bonds and debt-ceiling legislation would become dusty relics of a long-forgotten past. The Fed even had concerns about how open market operations would be conducted in a marketplace short of Treasury debt.
That utopian scenario did not last for long. Over the next seven years, federal spending grew at a 6.2 percent nominal annual rate while receipts grew at only 3.5 percent. Of course, certain areas of government, like national defense, had to spend more in the wake of 9/11. But nondefense discretionary spending actually rose 6.4 percent annually during this timeframe, outpacing the growth in total expenditures. Deficits soon returned, reaching an expected $410 billion for 2008—a $600 billion swing from where we were just eight years ago. This $410 billion estimate, by the way, was made before the recently passed farm bill and supplemental defense appropriation and without considering a proposed patch for the Alternative Minimum Tax—all measures that will lead to a further ballooning of government deficits.
...
Now, fast forward 70 or so years and ask this question: What is the mathematical predicament of Social Security today? Answer: The amount of money the Social Security system would need today to cover all unfunded liabilities from now on—what fiscal economists call the “infinite horizon discounted value” of what has already been promised recipients but has no funding mechanism currently in place—is $13.6 trillion, an amount slightly less than the annual gross domestic product of the United States.
...
Please sit tight while I walk you through the math of Medicare. As you may know, the program comes in three parts: Medicare Part A, which covers hospital stays; Medicare B, which covers doctor visits; and Medicare D, the drug benefit that went into effect just 29 months ago. The infinite-horizon present discounted value of the unfunded liability for Medicare A is $34.4 trillion. The unfunded liability of Medicare B is an additional $34 trillion. The shortfall for Medicare D adds another $17.2 trillion. The total? If you wanted to cover the unfunded liability of all three programs today, you would be stuck with an $85.6 trillion bill. That is more than six times as large as the bill for Social Security. It is more than six times the annual output of the entire U.S. economy.
...
Suppose we decided to tackle the issue solely on the spending side. It turns out that total discretionary spending in the federal budget, if maintained at its current share of GDP in perpetuity, is 3 percent larger than the entitlement shortfall. So all we would have to do to fully fund our nation’s entitlement programs would be to cut discretionary spending by 97 percent. But hold on. That discretionary spending includes defense and national security, education, the environment and many other areas, not just those controversial earmarks that make the evening news. All of them would have to be cut—almost eliminated, really—to tackle this problem through discretionary spending.
...
Of late, we have heard many complaints about the weakness of the dollar against the euro and other currencies. It was recently argued in the op-ed pages of the Financial Times [3] that one reason for the demise of the British pound was the need to liquidate England’s international reserves to pay off the costs of the Great Wars. In the end, the pound, it was essentially argued, was sunk by the kaiser’s army and Hitler’s bombs. Right now, we—you and I—are launching fiscal bombs against ourselves. You have it in your power as the electors of our fiscal authorities to prevent this destruction. Please do so ...
Wednesday, June 4, 2008
America's house prices are falling even faster than during the Great Depression ... 18% vs.10.5% in 1932
House prices | Through the floor | May 29th 2008 | From Economist.com
AS HOUSE prices in America continue their rapid descent, market-watchers are having to cast back ever further for gloomy comparisons. The latest S&P/Case-Shiller national house-price index, published this week, showed a slump of 14.1% in the year to the first quarter, the worst since the index began 20 years ago. Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression. And things are even worse than they look. In the deflationary 1930s house prices declined less in real terms. Today inflation is running at a brisk pace, so property prices have fallen by a staggering 18% in real terms over the past year. ...
AS HOUSE prices in America continue their rapid descent, market-watchers are having to cast back ever further for gloomy comparisons. The latest S&P/Case-Shiller national house-price index, published this week, showed a slump of 14.1% in the year to the first quarter, the worst since the index began 20 years ago. Now Robert Shiller, an economist at Yale University and co-inventor of the index, has compiled a version that stretches back over a century. This shows that the latest fall in nominal prices is already much bigger than the 10.5% drop in 1932, the worst point of the Depression. And things are even worse than they look. In the deflationary 1930s house prices declined less in real terms. Today inflation is running at a brisk pace, so property prices have fallen by a staggering 18% in real terms over the past year. ...
Overpaid Bosses
Overpaid Bosses | Saturday 31 May 2008 | by: Le Monde| Editorial
Is it tolerable that company executives should receive as much salary in a week as an employee does during his whole working life? ...
...
There's no question in this instance of pleading for a leveling equalitarianism, only of asserting that it is indecent, amoral, socially destructive and irresponsible to practice such wage disparities. They are, moreover, unprecedented in the history of capitalism. In several Northern European countries, voices are protesting in favor of a ceiling on the most extravagant remunerations. That would be a second-best solution. But, clearly, self-discipline is not adequate - even to protect capitalism from its own excesses.
Is it tolerable that company executives should receive as much salary in a week as an employee does during his whole working life? ...
...
There's no question in this instance of pleading for a leveling equalitarianism, only of asserting that it is indecent, amoral, socially destructive and irresponsible to practice such wage disparities. They are, moreover, unprecedented in the history of capitalism. In several Northern European countries, voices are protesting in favor of a ceiling on the most extravagant remunerations. That would be a second-best solution. But, clearly, self-discipline is not adequate - even to protect capitalism from its own excesses.
US; A Broadband Backwater: drops from 4th to 15th out of 30 indusrtrial countries in 6 years ...
The Cure for America’s Internet - CommonDreams.org
...
A Broadband Backwater
The shortcomings of the U.S. broadband market are tremendous - more than 10 million U.S. households remain un-served, while nearly 50 million homes are priced out of subscribing to broadband services - and the social and economic consequences are dire.
Late last month, yet another global survey confirmed this, showing the U.S. to be more of an Internet backwater than a world leader. According to the Organization for Economic Cooperation and Development (OECD), Internet access and services in America have slid to 15th place among 30 developed nations, a drop from our 12th place ranking in 2006, and from fourth in 2001 when the OECD began its international survey.
In real terms this means Internet users in Japan pay little more than half the price (65 cents to the dollar) for an Internet connection that’s 20 times faster than what’s commonly available to people in the United States.
...
In 2004, President Bush pledged “to have a universal, affordable access for broadband technology by the year 2007.”
As if on cue, last year, Mr. Bush’s chief Internet officer John Kneuer declared “Mission Accomplished” — that all the international surveys were misleading and that the “free market” had ensured that Americans across the country enjoy real choice in high-speed internet access.
...
What he and his White House compatriots refuse to acknowledge, though, is that a free market approach for Internet services in the U.S. is a chimera. The only hand in play here belongs to the phone and cable duopoly, which controls broadband access for more than 98 percent of homes.
The net effect of this duopoly is a dearth or real choices; allowing providers like AT&T and Comcast to exact high prices from Internet users, while delivering connections that are too slow — and, often in the case of cable, too congested - to meet growing demand.
The market imbalance is beginning to take its toll. A Brookings Institution study counts 300,000 new American jobs each year for every 1 percent increase in broadband adoption.
...
Japan Pries Open Its Market
...
A Broadband Backwater
The shortcomings of the U.S. broadband market are tremendous - more than 10 million U.S. households remain un-served, while nearly 50 million homes are priced out of subscribing to broadband services - and the social and economic consequences are dire.
Late last month, yet another global survey confirmed this, showing the U.S. to be more of an Internet backwater than a world leader. According to the Organization for Economic Cooperation and Development (OECD), Internet access and services in America have slid to 15th place among 30 developed nations, a drop from our 12th place ranking in 2006, and from fourth in 2001 when the OECD began its international survey.
In real terms this means Internet users in Japan pay little more than half the price (65 cents to the dollar) for an Internet connection that’s 20 times faster than what’s commonly available to people in the United States.
...
In 2004, President Bush pledged “to have a universal, affordable access for broadband technology by the year 2007.”
As if on cue, last year, Mr. Bush’s chief Internet officer John Kneuer declared “Mission Accomplished” — that all the international surveys were misleading and that the “free market” had ensured that Americans across the country enjoy real choice in high-speed internet access.
...
What he and his White House compatriots refuse to acknowledge, though, is that a free market approach for Internet services in the U.S. is a chimera. The only hand in play here belongs to the phone and cable duopoly, which controls broadband access for more than 98 percent of homes.
The net effect of this duopoly is a dearth or real choices; allowing providers like AT&T and Comcast to exact high prices from Internet users, while delivering connections that are too slow — and, often in the case of cable, too congested - to meet growing demand.
The market imbalance is beginning to take its toll. A Brookings Institution study counts 300,000 new American jobs each year for every 1 percent increase in broadband adoption.
...
Japan Pries Open Its Market
In 2000, Japan faced a similar dilemma — an Internet industry stifled by the heavy hand of a few network gatekeepers. But the government responded by pulling together the nation’s leaders from the pubic and private sector to launch an “e-Japan strategy” aimed at connecting 40 million of Japan’s 46 million households within five years.
The Japanese government quickly moved to create a highly competitive private sector by compelling regional telephone companies to open their residential lines to wholesale access by other competitors. They also adopted policies to prevent the type of online discrimination that has reared its head recently in the U.S.
In 2001, Japan counted only 2.2 broadband subscribers per 100 inhabitants. By mid-2004, ultra-high-speed broadband connections were available to more than 80 percent of Japan’s citizens. By 2006, Japan declared that it had surpassed the broadband goals of e-Japan and was ready to launch its next national strategy, called “u-Japan“. The “u” takes the nation’s broadband beyond “ubiquitous,” to become “universal,” “user-oriented,” and “unique.” ...
at least 3 million too many empty housing units in the country. This number, moreover, is rising ...
It's Only Going to Get Worse Everything you always wanted to know about the housing crash, but were afraid to ask. | by Lawrence B. Lindsey | 06/09/2008,
...
There are 129 million housing units in the United States, comprising owner-occupied, rented, and vacant units. Of these, 18.5 million are empty. This vacancy rate is 2.5 percentage points higher than it has been at any point in the half century the data have been tracked, translating into at least 3 million too many empty housing units in the country. This number, moreover, is rising. This is the most intractable part of the real estate bubble, for we cannot find a true bottom to home prices until this inventory of empty units starts to clear, and we cannot find a bottom to the mortgage finance market until home prices bottom out. ...
...
There are 129 million housing units in the United States, comprising owner-occupied, rented, and vacant units. Of these, 18.5 million are empty. This vacancy rate is 2.5 percentage points higher than it has been at any point in the half century the data have been tracked, translating into at least 3 million too many empty housing units in the country. This number, moreover, is rising. This is the most intractable part of the real estate bubble, for we cannot find a true bottom to home prices until this inventory of empty units starts to clear, and we cannot find a bottom to the mortgage finance market until home prices bottom out. ...
A State-by-State Assessment of America's Economic Health and a Prescription for Change
The Stress Test | A State-by-State Assessment of America's Economic Health and a Prescription for Change | By Eric Lotke, Alex Carter, Molly Swartz | Institute for America's Future | May 14th, 2008
Read the full report (PDF) | State stress test statistics
What "The Stress Test" Measures
Jobs
- Unemployment rates and changes in unemployment rates (March 2000-March 2008)
- Changes in the number of goods-producing and service-providing jobs (March 2000-March 2008)
- Changes in available construction jobs (March 2000-2008)
- Changes in available manufacturing jobs (March 2000-2008)
- Changes in average weekly wage (Q3 2001-Q3 2007)
Costs and quality of life
- People without health insurance, per 1,000 residents; rate and change over time; overall and employer-based (2000-2006)
- Population spending 25 percent of pre-tax income on health care; rate and change (2000-2008)
- Public college tuition as a percentage of income; rate and change over time (2000-2001 – 2006-2007)
- Bankruptcy, per capita; rate and change over time (2006-2007)
- Foreclosures, per capita (2007)
- Average price of gas, change over time(January 2000-February 2008) ...
Crisis shows us once again that the markets are incapable of self-regulation ... Decent capitalism requires effective government intervention ...
Mad Finance Must Not Rule Us | Wednesday 21 May 2008 | by: Jacques Delors, Jacques Santer, Helmut Schmidt, Massimo d'Alema, Lionel Jospin, Pavvo Lipponen, Goran Persson, Poul Rasmussen, Michel Rocard, Daniel Daianu, Hans Eichel, Par Nuder, Ruairi Quinn, Otto Graf Lambsdorff, Le Monde
This financial crisis is not the product of an accident. It was not impossible to foresee, as many of the world's top financial and political leaders today allege. The alarm had been sounded, years ago already, by clear-mined individuals. This crisis, in fact, incarnates the failure of little- or poorly-regulated markets and shows us once again that the markets are incapable of self-regulation. ...
Financial markets have become more and more opaque and identifying those who bear and evaluate their risks has been revealed as a titanic challenge. The so-called "shadow" banking sector - barely or not-at-all regulated - has only grown during the last 20 years. The big banks have participated in a "creation and distribution" game of extremely complex financial products and embarked on the sale of debts - wrapped in rather questionable packaging - linked to high-risk real estate loans. Defective bonus systems, excessively short-term vision and obvious conflicts of interest have encouraged speculative transactions.
Unsound mortgage loans wrongly based on the idea that real estate prices would continue to climb forever, thus allowing the debt contracted to be reimbursed, are only a symptom of a broader crisis in financial governance and commercial practices. The world's three top rating agencies rated these phony assets as relatively riskless. An investment bank earned billions of US dollars speculating on subprime securities' reduction in value, even as they were selling those securities to their clients, which more than eloquently summarizes the loss of any ethics in the business world!
...
Growing income inequality has occurred in tandem with the continuous growth of the financial sector. It's true that technical progress has contributed significantly to the ever more significant differences in income that benefit highly trained personnel. Nonetheless, imprudent policies have also had a major impact in this domain. Financial capital currently represents 15 times the gross domestic product (GDP) of all countries. The cumulative debts of households, financial and non-financial companies, and American government at all levels represents over three times the United States's GDP, or twice the level recorded at the time of the 1929 stock market crash.
...
Free markets cannot make a mockery of social morality. The father of economic laissez-faire, Adam Smith, also wrote the "Theory of Moral Sentiments," while Max Weber established the connections between hard work and moral values on the one hand and the advance of capitalism on the other. Decent capitalism (that is capitalism which respects human dignity, to re-echo Amartya Sen's remarks) requires effective government intervention. The pursuit of profit constitutes the essence of the market economy. But when everything is for sale, social cohesion disintegrates and the system collapses. ...
...
Jacques Delors and Jacques Santer are former presidents of the European Commission.
Helmut Schmidt is a former German chancellor.
Massimo d'Alema (Italy), Lionel Jospin (France), Pavvo Lipponen (Finland), Goran Persson (Sweden), Poul Rasmussen (Denmark), Michel Rocard (France) are former prime ministers.
Daniel Daianu (Romania), Hans Eichel (Germany), Par Nuder (Sweden), Ruairi Quinn (Ireland), Otto Graf Lambsdorff (Germany) are all former economics and/or finance ministers.
This financial crisis is not the product of an accident. It was not impossible to foresee, as many of the world's top financial and political leaders today allege. The alarm had been sounded, years ago already, by clear-mined individuals. This crisis, in fact, incarnates the failure of little- or poorly-regulated markets and shows us once again that the markets are incapable of self-regulation. ...
Financial markets have become more and more opaque and identifying those who bear and evaluate their risks has been revealed as a titanic challenge. The so-called "shadow" banking sector - barely or not-at-all regulated - has only grown during the last 20 years. The big banks have participated in a "creation and distribution" game of extremely complex financial products and embarked on the sale of debts - wrapped in rather questionable packaging - linked to high-risk real estate loans. Defective bonus systems, excessively short-term vision and obvious conflicts of interest have encouraged speculative transactions.
Unsound mortgage loans wrongly based on the idea that real estate prices would continue to climb forever, thus allowing the debt contracted to be reimbursed, are only a symptom of a broader crisis in financial governance and commercial practices. The world's three top rating agencies rated these phony assets as relatively riskless. An investment bank earned billions of US dollars speculating on subprime securities' reduction in value, even as they were selling those securities to their clients, which more than eloquently summarizes the loss of any ethics in the business world!
...
Growing income inequality has occurred in tandem with the continuous growth of the financial sector. It's true that technical progress has contributed significantly to the ever more significant differences in income that benefit highly trained personnel. Nonetheless, imprudent policies have also had a major impact in this domain. Financial capital currently represents 15 times the gross domestic product (GDP) of all countries. The cumulative debts of households, financial and non-financial companies, and American government at all levels represents over three times the United States's GDP, or twice the level recorded at the time of the 1929 stock market crash.
...
Free markets cannot make a mockery of social morality. The father of economic laissez-faire, Adam Smith, also wrote the "Theory of Moral Sentiments," while Max Weber established the connections between hard work and moral values on the one hand and the advance of capitalism on the other. Decent capitalism (that is capitalism which respects human dignity, to re-echo Amartya Sen's remarks) requires effective government intervention. The pursuit of profit constitutes the essence of the market economy. But when everything is for sale, social cohesion disintegrates and the system collapses. ...
...
Jacques Delors and Jacques Santer are former presidents of the European Commission.
Helmut Schmidt is a former German chancellor.
Massimo d'Alema (Italy), Lionel Jospin (France), Pavvo Lipponen (Finland), Goran Persson (Sweden), Poul Rasmussen (Denmark), Michel Rocard (France) are former prime ministers.
Daniel Daianu (Romania), Hans Eichel (Germany), Par Nuder (Sweden), Ruairi Quinn (Ireland), Otto Graf Lambsdorff (Germany) are all former economics and/or finance ministers.
In 20 years, incomes of top 1 percent of taxpayer jumped from 11.3 to 21.2 percent of the national total
Poisonous Plutocracy Pushes Economic Inequality : Information Clearing House - ICH By Joel S. Hirschhorn
28/05/08 "ICH" -- - The biggest political issue receiving no attention by the Democratic and Republican presidential candidates is the powerful plutocracy that has captured the government to produce rising economic inequality.
Both major parties have enabled, promoted and supported this Upper Class plutocracy. Myriad federal policies make the rich super-rich and the powerful dominant in both good and bad economic times. Meanwhile, despite elections, the middle class sinks into one big Lower Class as the plutocracy ensures that national prosperity is unshared.
Economic data show the plutocracy’s assault on American society. Consider these examples.
The top 20 percent of households earned more, after taxes, than the remaining 80 percent in 2005, while the topmost 1 percent took home more than the bottom 40 percent.
No American state has seen the gap between rich and poor widen faster than Connecticut. From 1987 through 2006, the top fifth of the state’s households saw their incomes increase by 44.8 percent, after inflation. Incomes for the bottom fifth fell 17.4 percent. On the other coast, just three of every 1,000 Californians in 2005 reported at least $1 million in income. But they got $213 of every $1,000 Californians earned in 2005 income. The state’s top 1 percent – average income $1.6 million – pay 7.1 percent of their incomes in income, sales, property, and gas taxes. The poorest fifth of California households pay 11.7 percent.
Real hourly wages for most workers have risen only 1 percent since 1979, even as those workers' productivity has increased by 60 percent. Higher efficiency has rewarded business executives, owners and investors, but not workers. What's more, American workers now work more hours per year than their counterparts in virtually every other advanced economy, even Japan, and without universal health care.
A typical hedge fund manager makes 31 times more in one hour than the typical American family makes in a year. In 2007, the top 50 hedge fund income-earners collected $29 billion – an average of $581 million each. John Paulson took home $3.7 billion from his hedge fund labors.
...
Between 1986 and 2005, the income of America’s top 1 percent of taxpayer jumped from 11.3 to 21.2 percent of the national total. Their federal income taxes dropped from 33.13 percent of total personal income in 1986 to 23.13 percent in 2005. From 2001 to 2008, the net worth of the wealthiest 1 percent grew from $186 billion to $816 billion. ...
28/05/08 "ICH" -- - The biggest political issue receiving no attention by the Democratic and Republican presidential candidates is the powerful plutocracy that has captured the government to produce rising economic inequality.
Both major parties have enabled, promoted and supported this Upper Class plutocracy. Myriad federal policies make the rich super-rich and the powerful dominant in both good and bad economic times. Meanwhile, despite elections, the middle class sinks into one big Lower Class as the plutocracy ensures that national prosperity is unshared.
Economic data show the plutocracy’s assault on American society. Consider these examples.
The top 20 percent of households earned more, after taxes, than the remaining 80 percent in 2005, while the topmost 1 percent took home more than the bottom 40 percent.
No American state has seen the gap between rich and poor widen faster than Connecticut. From 1987 through 2006, the top fifth of the state’s households saw their incomes increase by 44.8 percent, after inflation. Incomes for the bottom fifth fell 17.4 percent. On the other coast, just three of every 1,000 Californians in 2005 reported at least $1 million in income. But they got $213 of every $1,000 Californians earned in 2005 income. The state’s top 1 percent – average income $1.6 million – pay 7.1 percent of their incomes in income, sales, property, and gas taxes. The poorest fifth of California households pay 11.7 percent.
Real hourly wages for most workers have risen only 1 percent since 1979, even as those workers' productivity has increased by 60 percent. Higher efficiency has rewarded business executives, owners and investors, but not workers. What's more, American workers now work more hours per year than their counterparts in virtually every other advanced economy, even Japan, and without universal health care.
A typical hedge fund manager makes 31 times more in one hour than the typical American family makes in a year. In 2007, the top 50 hedge fund income-earners collected $29 billion – an average of $581 million each. John Paulson took home $3.7 billion from his hedge fund labors.
...
Between 1986 and 2005, the income of America’s top 1 percent of taxpayer jumped from 11.3 to 21.2 percent of the national total. Their federal income taxes dropped from 33.13 percent of total personal income in 1986 to 23.13 percent in 2005. From 2001 to 2008, the net worth of the wealthiest 1 percent grew from $186 billion to $816 billion. ...
The Global Trade in Prisoners' Blood: FDA pulled the company’s license to sell blood “for falsifying records and shipping hot blood.”
Jeffrey St. Clair: Arkansas Bloodsuckers May 31 / June 1, 2008 | The Global Trade in Prisoners' Blood | By JEFFREY ST. CLAIR
... fat contract to a Little Rock company called Health Management Associates, or HMA. The company was paid $3 million a year to run medical services for the state’s prison system, which had been blasted in a ruling by the US Supreme Court as an “evil place run by some evil men.”
HMA not only made money from providing medical care to prisoners, but it also started a profitable side venture: blood mining. The company paid prisoners $7 per pint of their blood. HMA then sold the blood on the international plasma market for $50 a pint, splitting the proceeds 50/50 with the Arkansas Department of Corrections. Since Arkansas is one of the few states that does not pay prisoners for their labor, inmates were frequent donors at the so-called “blood clinic.” Hundreds of prisoners sold as much as two pints a week to HMA. The blood was then sold to pharmaceutical companies, such as Bayer and Baxter International; blood banks, such as the Red Cross; and so-called blood fractionizers, who transformed the blood into medicines for hemophiliacs.
...
... the FDA pulled the company’s license to sell blood “for falsifying records and shipping hot blood.” The report goes on to say that “the suspension was for collecting and shipping plasma which had been collected from donors with a history of positive tests for [Hepatitis B]...the violations were directly related to using inmate labor in the record and donor reject list.”
Dunn, and the Arkansas Department of Corrections, convinced the FDA that the fault lay with a prison guard who was taking kickbacks from prisoners in order to let them get back into the blood trade. The license was quickly restored and tainted blood once more began to flow. ...
... fat contract to a Little Rock company called Health Management Associates, or HMA. The company was paid $3 million a year to run medical services for the state’s prison system, which had been blasted in a ruling by the US Supreme Court as an “evil place run by some evil men.”
HMA not only made money from providing medical care to prisoners, but it also started a profitable side venture: blood mining. The company paid prisoners $7 per pint of their blood. HMA then sold the blood on the international plasma market for $50 a pint, splitting the proceeds 50/50 with the Arkansas Department of Corrections. Since Arkansas is one of the few states that does not pay prisoners for their labor, inmates were frequent donors at the so-called “blood clinic.” Hundreds of prisoners sold as much as two pints a week to HMA. The blood was then sold to pharmaceutical companies, such as Bayer and Baxter International; blood banks, such as the Red Cross; and so-called blood fractionizers, who transformed the blood into medicines for hemophiliacs.
...
... the FDA pulled the company’s license to sell blood “for falsifying records and shipping hot blood.” The report goes on to say that “the suspension was for collecting and shipping plasma which had been collected from donors with a history of positive tests for [Hepatitis B]...the violations were directly related to using inmate labor in the record and donor reject list.”
Dunn, and the Arkansas Department of Corrections, convinced the FDA that the fault lay with a prison guard who was taking kickbacks from prisoners in order to let them get back into the blood trade. The license was quickly restored and tainted blood once more began to flow. ...
Indefensible Spending - future planned investment in those ultra-pricey weapons from $790 billion to $1.6 trillion
Indefensible Spending - CommonDreams.orgSunday, June 1, 2008 by the Los Angeles Times | by Robert Scheer
... Why is U.S. military spending at the highest point, in inflation-adjusted dollars, than at any time since the end of World War II? Why, without a sophisticated military opponent in sight, is the United States spending trillions of dollars on the development of high-tech weapons systems that lost their purpose with the collapse of the Soviet Union two decades ago?
...
The Pentagon’s budget for fiscal year 2008 set a post-World War II record at $625 billion, and that does not include more than $100 billion in other federal budget expenditures for homeland security, nuclear weapons and so-called black budget — or covert — operations.
And what are we spending all this money on? We are talking high-tech war toys designed to fight a Cold War enemy that no longer exists, including the F-35 Joint Strike Fighter program, with its estimated total price tag of $300 billion, and Virginia-class submarines at $2.5 billion each. Who cares that the terrorists lack submarines for the Navy to battle deep in the ocean, for which the Virginia-class submarine was designed?
...
Since President Bush’s first year in office, according to the Government Accountability Office, the Defense Department has doubled its future planned investment in those ultra-pricey weapons from $790 billion to $1.6 trillion. ...
...
Maybe one can make a case that it is appropriate that more than half of the discretionary funds in the 2009 budget go to defense, and all the other federal programs for science, education, infrastructure, global warming and nonmilitary international programs compete for the rest. But isn’t it bizarre that the biggest peacetime military budget in U.S. history — 35% higher than when Bush came into office and larger than the military budgets of all other nations combined — is not even discussed in the current presidential contest? ...
... Why is U.S. military spending at the highest point, in inflation-adjusted dollars, than at any time since the end of World War II? Why, without a sophisticated military opponent in sight, is the United States spending trillions of dollars on the development of high-tech weapons systems that lost their purpose with the collapse of the Soviet Union two decades ago?
...
The Pentagon’s budget for fiscal year 2008 set a post-World War II record at $625 billion, and that does not include more than $100 billion in other federal budget expenditures for homeland security, nuclear weapons and so-called black budget — or covert — operations.
And what are we spending all this money on? We are talking high-tech war toys designed to fight a Cold War enemy that no longer exists, including the F-35 Joint Strike Fighter program, with its estimated total price tag of $300 billion, and Virginia-class submarines at $2.5 billion each. Who cares that the terrorists lack submarines for the Navy to battle deep in the ocean, for which the Virginia-class submarine was designed?
...
Since President Bush’s first year in office, according to the Government Accountability Office, the Defense Department has doubled its future planned investment in those ultra-pricey weapons from $790 billion to $1.6 trillion. ...
...
Maybe one can make a case that it is appropriate that more than half of the discretionary funds in the 2009 budget go to defense, and all the other federal programs for science, education, infrastructure, global warming and nonmilitary international programs compete for the rest. But isn’t it bizarre that the biggest peacetime military budget in U.S. history — 35% higher than when Bush came into office and larger than the military budgets of all other nations combined — is not even discussed in the current presidential contest? ...
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